XYZ, a bicycle manufacturer, uses an activity based costing system for budgeting. XYZ has identified four cost centers and their associated cost-drivers. The variable and fixed costs for each activity are listed below, along with cost-driver activity.

Activity	Variable Cost	Fixed Cost	Cost Driver Activity
Setup	$14,400	$15,000	12 setups
Processing	$180,000	$21,000	18,000 machine hours
Assembly	$90,000	$12,000	3,000 assembly line hours
Administration	$1,800	$18,000	6,000 units

XYZ has developed a flexible budget for each activity based on the following activity. We assume that the manufacturer sells each unit of its product for $70.

Activity	Activity Level			Cost Driver
(Sales in Units)	5,000	6,000	7,000
Setup	10	12	14	Number of Setups
Processing	15,000	18,000	21,000	Machine Hours
Assembly	2,500	3,000	3,500	Assembly Line Hours
Administration	5,000	6,000	7,000	Units

(1) Given the actual results in the following table, prepare a cost control performance report comparing the flexible budget to actual results for each activity, including flexible-budget variances. Similarly prepare an overall performance report for operating income.

Activity	Actual Activity Level	Actual Cost
(Sales in Units)	6,500
(Sales in Dollars)	$430,000
Setup	13	$28,000
Processing	19,000	$199,000
Assembly	3,200	$110,000
Administration	6,500	$22,800